Second, this is all basically their fault. In retrospect, we now see that the $900 million writedown in 1997 of failed data-provider Telerate was a defining moment that required leadership. Looking back, we know that only a radical change direction, including a change in senior management, could have saved the company while there was still time. And 10 years is actually a fairly long time. Look what former newspaper publisher and data-provider Thomsom Corp. has done compared to DJ in five (Factiva doesn’t go back 10 years. Try Bloomberg. P.S. Ignore the spike in DJ shares caused by the News Corp. offer).
That was one time to exercise the power, and the responsibility, that comes with those Class B shares. Removing former Chairman and CEO Peter Kann, cutting the dividend and increasing leverage would have given the company a fighting chance.
But, that’s in retrospect. it is hard to know what to do in real time, though some Bancrofts and many people on Wall Street did voice concern back then. But, again, that’s all money under Bridge.(3)
Having said all that, the Bancrofts’ hearts are in the right place. As they said during this deal and have repeated many times:
As we have been since 1902, the Bancroft Family remains resolute in its commitment to preserve and protect the editorial independence and integrity of The Wall Street Journal…
I believe them. At this point, though, there’s really only one way to do that.
Now is the last chance for the Bancrofts to step up to the responsibility that comes with their extraordinary, accidental and lucrative birthright. This is the moment those Class B shares were created for in the first place. Or is the idea that privilege comes with responsibility another one of those conservative “principles,” like smaller government, say, that gets jettisoned at feeding time? Maybe it’s as antique as the idea of an independent, fair and fearless financial watchdog. We’ll see.
After the “no” vote, changes must be made, of course. As Ottaway has said, “damage has been done.”
Zannino and the board must step down, having conceded with this deal that they are unable to successfully manage the company.
And at least questions should be asked about whether the three editors who accepted guaranteed jobs under the editorial side agreement, in an effort to help mitigate the consequences of a deal, helped pave the way for one.
And the Bancrofts would need to sell their shares (at a price far below $60, I’m afraid) to a creative and patient investor who doesn’t need income now. That would be a final, and gracious, act of stewardship.
1. An excellent WSJ graphic on the family is available here.
2. Take and Give: Condemnation Is Used To Hand One Business Property of Another —- Tactic by Local Governments Seeking Jobs and Taxes Is Protested as Unfair —- BMW Yes, Mitsubishi No
December 2, 1998
The Wall Street Journal
3. Dow Jones sold its Telerate business to Bridge Information Systems Inc. in 1998 at a loss of more than $1 billion, then wrote down an equity stake in Bridge, which filed for bankruptcy in 2001.